Cannabis

The Alaska cannabis industry has a new gun in town.
Rose Law Group, an Arizona business law firm, has sent an attorney to the Last Frontier to represent marijuana industry interests, including lobbying during the 2016 legislative session.
The move is a new stage in development for Alaska cannabis businesses. Much of the current legal representation for industry leaders draws from criminal practice, rather than business.
This includes Lance Wells, an Anchorage attorney who represents marijuana club Pot Luck Events and who started the Alaska Cannabis Law Group LLC in partnership with attorney David Schlerf. California criminal and medicinal marijuana attorney Ben Adams has branded himself “Alaska’s pot attorney,” and has aggressively courted industry since Nov. 2014.
Jana Weltzin, a Fairbanks native who recently moved to Anchorage from Rose Law’s Scottsdale, Ariz., headquarters, said her firm has what Alaska’s budding industry needs most: business expertise and political savvy.
“I’m not a criminal lawyer,” said Weltzin. “I’m a business lawyer, a client advisor. I structure businesses so they make sense. A criminal lawyer sees an action as legal or illegal. I have to look at it and say, technically, maybe it’s not illegal, but is it politically smart? I have to weigh those considerations. There’s a huge difference between something being legally allowed and politically smart.”
Rose Law entered the marijuana industry in 2010 after Arizona legalized medicinal marijuana. Since then, the firm has built a cadre of cannabis business attorneys specializing in marijuana cultivation land development, zoning for cultivations and dispensaries, cultivation management agreements, and business transactions.
“We structure their business to maximize profits and minimize risk,” said Weltzin. “There are things we point out you should have.”
Weltzin said Alaska industry, which has no existing marijuana business infrastructure, can benefit from Rose Law’s Arizona expertise and experience.
“The market’s not fleshed out here,” Weltzin said. “At Rose Law, we’ve gotten to see how that industry works. If you haven’t seen that firsthand, it’s really difficult to conceptualize.”
Founded by Jordan Rose in 2000, Rose Law specializes in real estate and business law, practicing in land use, zoning, renewable energy, government relations and lobbying, administrative law, transactional real estate, employment law, water law, Native American relations, infrastructure finance, special districts taxation, business formation/corporation issues, and business litigation.
Rose Law has an extensive clientele list in the Southwest and a solid reputation for representing marijuana interests.
“They’re quite successful,” said Kris Kane, former associate director of the National Organization for the Reform of Marijuana Law. “They’re very politically connected in Arizona and a very influential firm in the state. Their reputation on (marijuana) has been very positive. One of the biggest complaints I hear about them is they’re very expensive and bill aggressively, but you can say the same about any good law firm.”

The Alaska Marijuana Control Board accepted draft regulatory language on Sept. 24 that would ban cannabis social clubs, unable to establish any regulations around a license type that was not specified in the ballot initiative that legalized cannabis. The existence of cannabis social clubs will now depend on the Alaska Legisature to establish the license type, informed by a planned policy statement from the board.
Marijuana clubs, which do not sell cannabis but allow cannabis users to consume and share on premises, have been a legal gray area in Alaska. Use and possession of cannabis is legal, but business licenses for sale and cultivation will not be issued until May 2016. Because cannabis clubs do not sell, they do not fall under regulatory authority, which either prevents the board from allowing them or from prohibiting them, depending on who you ask.
In July, Anchorage cannabis social club Pot Luck Events received a cease and desist letter from board director Cynthia Franklin, along with Alaska Cannabis Club, Northern Heights, and Green Rush Events. Franklin’s cease and desist letter carried less than bulletproof legal weight because of the nebulous legal status of marijuana clubs, and Pot Luck Events has continued operation.
Pot Luck manager Theresa Collins said the club will continue to operate until Nov. 24, when the Legislature must adopt, reject, or alter the recommended regulations the board has written.
The state’s legal department argued that the board has no authority at all the regulate cannabis clubs, as there is no license for them in the first place.
The Alaska Department of Law had advised the board that it does not have the authority to create new licenses or even to craft regulations around nonexistence license types. The ballot initiative only specified four license types: cultivation, manufacturing, retail, and testing. According assistant attorney General Harriet Milks, said the Legislature must create the license type in statute before the board can regulate it.
“The Department of Law has already decided the board doesn’t have the authority,” said Milks. “It’s not your problem to fix. The Legislature has to take the initial steps.”
Collins said she doesn’t buy the argument.
“If they don’t have the authority to approve them, then how do they have the authority to prohibit them?” Collins said.
The board has already made it apparent that it needs legislative action before ruling one way or another on marijuana clubs.
“We’re pretty well on record saying we need some legislative guidance on this,” said board member Mark Springer. “We need to not dance around it, but right now, say that they’re not a license, knowing there may be some action by the Legislature to authorize the board to authorize marijuana clubs.”
Board member Brandon Emmett, vice president of the Alaska Marijuana Industry Association, disagreed with the Department of Law’s ruling, arguing the board was able to create a brokerage license despite not appearing in the ballot.
Some of the public agreed with Emmett.
“I don’t see how you can prohibit and not create,” said Lee Haywood, a local cannabis business consultant for Pot Luck Events, as he stormed out of the room.
“Broker licenses are a subset of a cultivator license,” responded Milks to Emmett. “Marijuana club is a completely different animal. It is a circumstance of using, selling, distributing marijuana that is not authorized by the Legislature at this time.”
Emmett voiced fears that the Legislature would not have the time or attention to even take up the matter during session.
“If we look at the last session, very little got put out on the marijuana issue besides the bill that created this board,” said Emmett, “and this might be something that slips through the cracks. I don’t see it a far stretch to create a marijuana club provision.”
Emmett also voiced concerns that a ban would be too strong, and misinform the Legislature that the board doesn't support their existence.
"If we accept this, it will send a message to the Legislature that we’ve already made our minds about how we feel," said Emmett. "If you look at the public comment, this has been arguably the most popular and controversial section in some time."
Board chairman Bruce Schulte highlighted the fact that several municipalities have drafted letters of support for marijuana clubs, and lamented the fact that the board has no authority to remedy a “chicken and the egg situation.”
Schulte said the board will attempt to craft policy statements expressing the board’s support of marijuana clubs’ existence, in an attempt to inform legislators of the public and board support for such businesses.
“The best way I think advocates and supporters to make it happen is to give legislators every reason to embrace them,” said Schulte. “Ballot 2 passed, but only by a small margin. Legislators are paying close attention to that 47 percent who didn’t support it.”
DJ Summers can be reached at [email protected]

The Alaska Marijuana Control Board met Sept. 14 in Kotzebue and Sept. 16 in Anchorage to accept the next round of draft regulations, which are to be recommended to the Legislature and approved by Nov. 24. The board focused on marijuana cultivator regulations, one of the four designated marijuana business licenses included in regulations, along with processors, retail stores, and testing facilities.
Three issues dominated discussion both in Kotzebue and in Anchorage: whether cultivator employees can consume cannabis on premises, limited cultivator operations, and product packaging.
Leif Abel, executive director of the Coalition for Responsible Cannabis Legislation, said he was actually encouraged by the topics’ relatively tame nature compared to the more heated security, zoning, and operational discussions for retail marijuana businesses in prior meetings. The fact that they’re arguing over smaller potatoes, he said, shows progress.
“All things considered, it’s good that we’re arguing over some these kind of smaller issues,” he said. “It shows just how far we’ve come since the beginning. There’s more understanding now.”
Samples and packaging
Draft regulations are confusing about packaging requirements, though the intent is clear: all products should leave the store in opaque packaging.
“The intent is that you can’t leave the store with visible product,” said board chair Bruce Schulte, “though I’m not sure how clear we were able to make that point.”
This is similar to Colorado laws, which demand all product leaving shops, whether edible or smokeable, to either be packaged in or placed in opaque and child-resistant bags. Colorado cannabis businesses struggled to find packaging when the requirement was instituted in 2013, but special packaging products are now being made specifically for compliance with regulations.
Industry representative board members argued in favor of clear or partially clear packaging, as cannabis has a visual factor key to successful sales.
“We’re underestimating the aesthetic value of the product,” said Schulte. “It may seem odd, but that could have significant economic value.”
In regulation, the matter is much less clear. Schulte said once the first draft has been approved the board will try to make the regulations clearer and less cumbersome.
As currently written, the regulations apply to cultivator packaging. All product, whether large or small, salable quantities, must be opaque.
Operationally, retail stores could have clear packaging for marijuana in the store, but require a separate opaque package for the final exiting purchase, much like the familiar brown paper bag in liquor stores.
Cultivators are allowed to provide samples to retail stores for in-store display in clear jars with screens over the top.
The original draft regulation specified that cultivators may only provide up to two grams of samples. Board member Brandon Emmett introduced an amendment to change the allowance to 28 grams, or one ounce, with no more than 28 grams of product given as samples per month, in order to accommodate cannabis concentrate manufacturers.
“Two grams isn’t going to do it for someone looking to make extract,” Emmett said.
Schulte argued that he simply couldn’t defend allowing non-commercial gifts of up to one ounce while limiting intracommercial interactions more tightly.
“It offends my sense of perfection that we would give a lesser amount to professional cultivators and more to non-licensees,” Schulte said.
Small growers
As a concession to mom and pop cannabis growers, the board will offer a limited cultivator license, which costs $1,000 rather than the $5,000 for a standard cultivator license.
Several of the smaller growers are concerned with limited cultivator regulations, including size limits and operational requirements.
Limited cultivators can only sell to retail facilities through cannabis brokers, rather than through direct relationships with retailers. Brokers will extract fees and percentages and make the process less profitable, according to Jessica Jansen.
“It’s already an expensive operation,” said Jansen, who is executive director of the Alaska Cannabis Growers Association and co-founder of CannaFarm Co-op. Jansen said she doesn’t understand why the board wouldn’t make limited cultivator brokerage an option, rather than a requirement.
Furthermore, limited cultivators will be held responsible for a broker’s unpaid taxes. Excise taxes on every ounce of cannabis must be paid prior to sale. If brokers don’t pay the taxes, the responsibility falls to the cultivator.
“It’s the secondary liability concept,” explained board executive director Cynthia Franklin. “We can expect that when the tax division comes out, it will beef this up. You can’t profit from a product that hasn’t paid its taxes. It happened with cigarettes. It’s the Al Capone rule.”
Schulte worried the measure would create a barrier for market entry for small growers who would otherwise simply remain in the black market.
“Why wouldn’t the state simply go after the broker in the same way?” asked Schulte. “This might give potential limited cultivators pause.”
A limited cultivator license requires a maximum of 500 square feet, which growers say is too limited.
The board, however, has no larger number on which to base its regulations.
“You have to remember that this has been a black market operation,” said Schulte. “We don’t exactly have the best statistics when it comes to what the size of the average home grow is.”
Random product testing
All cultivators will be subject to inspection and sampling by board enforcement “from time to time,” which must be done at the cultivator’s expense.
Industry is concerned with that a board director could potentially abuse the “time to time” allowance. Public comments feared that the board director, whether Franklin or a later director, could use random sampling to bankrupt and harass growers out of spite or personal grudge.
“I feel that this board and this director is not hostile to the industry, but that might not always be the case,” said Emmett. “The way this is written, regulation can be used against an unpopular individual.”
Franklin answered that random sampling is used in alcohol without any such behavior, and that administrative law would allow complaints of rogue directors to the board itself. She said industry needs to start trusting the administration the same way the administration will learn to trust the new industry.
“It has been working very well in alcohol for 35 years,” said Franklin. “In 35 years we haven’t seen the scenarios presented in these comments. What really has to change is the industry coming into regulation has to have some baseline faith in the staff.”
Board member Loren Jones said the chance of a hostile director’s random sampling abuse would depend on “the stars aligning.”
“’From time to time’ it creates a situation where if the starts did align, which is more common in politics than in astronomy, then you could have some serious problems,” said Emmett.
Emmett introduced an amendment that would specify only one sampling per quarter, but the amendment failed. Emmett was the only vote in favor.
No growing while high
The board left a possible loophole for onsite marijuana consumption at cultivator operations, which is expressly forbidden in all other licensed cannabis operations.
In Kotzebue, the board had changed draft regulation language to allow a designated spot in marijuana cultivator facilities for employees to consume cannabis. Public comment said the original draft language, which prohibited cannabis consumption within 20 feet of a cultivation facility, frustrates product sampling and discriminates against employees who need medicinal marijuana to function.
In Anchorage, however, the board reversed its Kotzebue decision and reinstated the ban on marijuana consumption within 20 feet of a cultivation facility.
Insurance was the biggest objection to allowing on site cannabis consumption. As per regulation, marijuana businesses must carry insurance. Allowing onsite consumption could make businesses hard to insure, and give a poor public impression regarding marijuana cultivators’ professionalism.
“I believe I approached you about the professionalism of the business of ability of the businesses to consume marijuana on cultivation premises, the difficulty in procuring insurance, the problems it could bring,” said Franklin in Anchorage.
After considering its Kotzebue decision, members of the board seem to have reconsidered their original positions.
“Maybe 20 feet isn’t that far to have to walk, if in fact you’re using it for what you perceive to be a therapeutic benefit,” said board member Mark Springer. “Bars, liquor stores, distilleries don’t have a recreational drinking room. I guess I would not have any opposition to going back.”
Schulte, president of the Alaska Marijuana Industry Association, said he prefers to leave insurance eligibility to business sense rather than regulation, but nonetheless voted in favor of rescinding the Kotzebue allowance.
“I would prefer it be up to the business owner,” said Schulte. He said the board will have the opportunity to revisit regulations later, however, and a potentially problematic issue needs more caution. “I’m inclined to take a more conservative approach now.”
Only Emmet, the vice-chair of the Alaska Marijuana Industry Association, voted against reinstating the onsite consumption ban.
“I still believe if you allow alcohol licenses to sample their product, marijuana licenses should be allowed to do the same thing,” said Emmett.
The cultivator ban on onsite employee product use could be inconsistent with other draft regulation allowances, and complicate retail sampling processes.
Part of the same section allows onsite cannabis testing. In regulation, this means specifically running your product through a battery of state-licensed tests that measure purity and biohazards, not the product’s effect during consumption.
Schulte, however, floated his interpretation on the record that testing could possibly include product effect. This would still ban employee consumption, but could allow for retail stores to sample the product onsite prior to purchase. The matter will depend on later application and interpretation.
DJ Summers can be reached at [email protected]

The U.S. Bureau of Ocean Energy Management released the Hilcorp Alaska development plan for the Liberty offshore oil field on Friday.
A 60-day public comment period began with the release as one of the initial steps in a multi-year permitting process.
According to Hilcorp’s filing, Liberty is the largest delineated but undeveloped light oil reservoir on the North Slope. It is located about 5 miles offshore in Foggy Bay where the water is about 19 feet deep. Hilcorp proposes to construct a gravel island and transport oil to shore via an underwater pipeline that will connect to the existing Badami pipeline and from there to the Trans-Alaska Pipeline System.
At peak production, Hilcorp estimates 60,000 to 70,000 barrels per day and that the reservoir holds between 80 million and 150 million barrels of oil. The company estimates it will take two years to reach peak production.
According to Hilcorp’s proposed development plan, a record of decision in September 2017 would allow for the project to begin that winter, with first oil coming in the first quarter of 2020.
Hilcorp acquired 50 percent of Liberty from BP last November, along with three other North Slope properties. BP previously submitted a development plan for Liberty that would have used extended reach drilling from onshore to reach the field, but withdrew that plan in November 2012.

The Alaska Marijuana Control Board met Sept. 14 in Kotzebue and Sept. 16 in Anchorage to accept the next round of draft regulations, which are to be recommended to the Legislature and approved by Nov. 24. The board focused on marijuana cultivator regulations, one of the four designated marijuana business licenses included in regulations, along with manufacturers, retail stores, and testing facilities.
Three issues dominated discussion both in Kotzebue and in Anchorage: whether cultivator employees can consume cannabis on premises, limited cultivator operations, and product packaging.
Leif Abel, executive director of the Coalition for Responsible Cannabis Legislation, said he was actually encouraged by the topics’ relatively tame nature compared to the more heated security, zoning, and operational discussions for retail marijuana businesses in prior meetings. The fact that they’re arguing over smaller potatoes, he said, shows progress.
“All things considered, it’s good that we’re arguing over some these kind of smaller issues,” he said. “It shows just how far we’ve come since the beginning. There’s more understanding now.”
Samples and packaging
Draft regulations are confused about packaging requirements, though the intent is clear: all products should leave the store in opaque packaging.
“The intent is that you can’t leave the store with visible product,” said board chair Bruce Schulte, “though I’m not sure how clear we were able to make that point.”
This is similar to Colorado laws, which demand all product leaving shops, whether edible or smokeable, to either be packaged in or placed in opaque and child-resistant bags. Colorado cannabis businesses struggled to find packaging when the requirement was instituted in 2013, but special packaging products are now being made specifically for compliance with regulations.
Industry representative board members argued in favor of clear or partially clear packaging, as cannabis has a visual factor key to successful sale.
“We’re underestimating the aesthetic value of the product,” said Schulte. “It may seem odd, but that could have significant economic value.”
In regulation, the matter is much less clear. Schulte said once the first draft has been approved the board will try to make the regulations clearer and less cumbersome.
As currently written, the regulations apply to cultivator packaging. All product, whether large or small, salable quantities, must be opaque.
Operationally, retail stores could have clear packaging for marijuana in the store, but require a separate opaque package for the final exiting purchase, much like the familiar brown paper bag in liquor stores.
Cultivators are allowed to provide samples to retail stores for in-store display in clear jars with screens over the top.
The original draft regulation specified that cultivators may only provide up to two grams of samples. Board member Brandon Emmett introduced an amendment to change the allowance to 28 grams, or one ounce, with no more than 28 grams of product given as samples per month, in order to accommodate cannabis concentrate manufacturers.
“Two grams isn’t going to do it for someone looking to make extract,” Emmett said.
Schulte argued that he simply couldn’t defend allowing non-commercial gifts of up to one ounce while limiting intracommercial interactions more tightly.
“It offends my sense of perfection that we would give a lesser amount to professional cultivators and more to non-licensees,” Schulte said.
Small growers
As a concession to mom and pop cannabis growers, the board will offer a limited cultivator license, which costs $1,000 rather than the $5,000 for a standard cultivator license.
Several of the smaller growers are concerned with limited cultivator regulations, including size limits and operational requirements.
Limited cultivators can only sell to retail facilities through cannabis brokers, rather than through direct relationships with retailers. Brokers will extract fees and percentages and make the process less profitable, according to Jessica Jansen.
“It’s already an expensive operation,” said Jansen, who is executive director of the Alaska Cannabis Growers Association and co-founder of CannaFarm Co-op. Jansen said she doesn’t understand why the board wouldn’t make limited cultivator brokerage an option, rather than a requirement.
Furthermore, limited cultivators will be held responsible for a broker’s unpaid taxes. Excise taxes on every ounce of cannabis must be paid prior to sale. If brokers don’t pay the taxes, the responsibility falls to the cultivator.
“It’s the secondary liability concept,” explained board executive director Cynthia Franklin. “We can expect that when the tax division comes out, it will beef this up. You can’t profit from a product that hasn’t paid its taxes. It happened with cigarettes. It’s the Al Capone rule.”
Schulte worried the measure would create a barrier for market entry for small growers who would otherwise simply remain in the black market.
“Why wouldn’t the state simply go after the broker in the same way?” asked Schulte. “This might give potential limited cultivators pause.”
A limited cultivator license requires a maximum of 500 square feet, which growers say is too limited.
The board, however, has no larger number on which to base its regulations.
“You have to remember that this has been a black market operation,” said Schulte. “We don’t exactly have the best statistics when it comes to what the size of the average home grow is.”
Random product testing
All cultivators will be subject to inspection and sampling by board enforcement “from time to time,” which must be done at the cultivator’s expense.
Industry is concerned with that a board director could potentially abuse the “time to time” allowance. Public comments feared that the board director, whether Franklin or a later director, could use random sampling to bankrupt and harass growers out of spite or personal grudge.
“I feel that this board and this director is not hostile to the industry, but that might not always be the case,” said Emmett. “The way this is written, regulation can be used against an unpopular individual.”
Franklin answered that random sampling is used in alcohol without any such behavior, and that administrative law would allow complaints of rogue directors to the board itself. She said industry needs to start trusting the administration the same way the administration will learn to trust the new industry.
“It has been working very well in alcohol for 35 years,” said Franklin. “In 35 years we haven’t seen the scenarios presented in these comments. What really has to change is the industry coming into regulation has to have some baseline faith in the staff.”
Board member Loren Jones said the chance of a hostile director’s random sampling abuse would depend on “the stars aligning.”
“’From time to time’ it creates a situation where if the starts did align, which is more common in politics than in astronomy, then you could have some serious problems,” said Emmett.
Emmett introduced an amendment that would specify only one sampling per quarter, but the amendment failed. Emmett was the only vote in favor.
No growing while high
The board left a possible loophole for onsite marijuana consumption at cultivator operations, which is expressly forbidden in all other licensed cannabis operations.
In Kotzebue, the board had changed draft regulation language to allow a designated spot in marijuana cultivator facilities for employees to consume cannabis. Public comment said the original draft language, which prohibited cannabis consumption within 20 feet of a cultivation facility, frustrates product sampling and discriminates against employees who need medicinal marijuana to function.
In Anchorage, however, the board reversed its Kotzebue decision and reinstated the ban on marijuana consumption within 20 feet of a cultivation facility.
Insurance was the biggest objection to allowing on site cannabis consumption. As per regulation, marijuana businesses must carry insurance. Allowing onsite consumption could make businesses hard to insure, and give a poor public impression regarding marijuana cultivators’ professionalism.
“I believe I approached you about the professionalism of the business of ability of the businesses to consume marijuana on cultivation premises, the difficulty in procuring insurance, the problems it could bring,” said Franklin in Anchorage.
After considering its Kotzebue decision, members of the board seem to have reconsidered their original positions.
“Maybe 20 feet isn’t that far to have to walk, if in fact you’re using it for what you perceive to be a therapeutic benefit,” said board member Mark Springer. “Bars, liquor stores, distilleries don’t have a recreational drinking room. I guess I would not have any opposition to going back.”
Schulte, president of the Alaska Marijuana Industry Association, said he prefers to leave insurance eligibility to business sense rather than regulation, but nonetheless voted in favor of rescinding the Kotzebue allowance.
“I would prefer it be up to the business owner,” said Schulte. He said the board will have the opportunity to revisit regulations later, however, and a potentially problematic issue needs more caution. “I’m inclined to take a more conservative approach now.”
Only Emmet, the vice-chair of the Alaska Marijuana Industry Association, voted against reinstating the onsite consumption ban.
“I still believe if you allow alcohol licenses to sample their product, marijuana licenses should be allowed to do the same thing,” said Emmett.
The cultivator ban on onsite employee product use could be inconsistent with other draft regulation allowances, and complicate retail sampling processes.
Part of the same section allows onsite cannabis testing. In regulation, this means specifically running your product through a battery of state-licensed tests that measure purity and biohazards, not the product’s effect during consumption.
Schulte, however, floated his interpretation on the record that testing could possibly include product effect. This would still ban employee consumption, but could allow for retail stores to sample the product onsite prior to purchase. The matter will depend on later application and interpretation.
DJ Summers can be reached at [email protected] Follow him on Twitter @djsummersmma

The Alaska Marijuana Control Board is parsing out what should be its business and what should be left to good business sense.
Aug. 31 began a two-day meeting for the Marijuana Control Board, which is on an aggressive deadline to approve a set of cannabis industry regulations. The board is reviewing the second of three draft regulation sets. Set two concerns retail business operations, including taxes, hours, and prohibited sale practices and items, and operating requirements.
Some regulations were loosened, despite pressure to conform to Colorado or Washington laws, in an effort to let businesses govern themselves.
The board unanimously approved amended language that would loosen a required “restricted area” in marijuana retail stores.
Prior to the amendment, the regulations specified an entire section of the store be off limits to customers specifically for storing and dispensing cannabis, ostensibly to keep thieves from stealing it and promoting a “public safety risk.”
Board Director Cynthia Franklin claimed that removing such areas would be unprecedented in states with recreational marijuana legalization.
“If you make Alaska stores look like that, they will be the first marijuana stores to look like that,” said Franklin. Franklin said the intent was to prevent thieves from “putting (cannabis) up their sleeve and walking out with it,” which she said could conceivably contribute to the black market.
Board members elected to keep the “restricted area” definition conformed to a standard set in the security section of the regulations. Board member Mark Springer believed the incentive to keep wares secured is best business practice, and shouldn’t be under the board’s authority, a theme the board would repeat several times during the day.
“The prudent business person is going to make pretty darn sure their investment is protected,” said Springer. “I don’t think we need to hold their hand.”
Don’ts
The board did elect, however, to hold businesses’ hands with product giveaways.
Among the long list of “can’ts” for retail businesses is giving free samples.
Board regulations prohibit marijuana consumption on retail store premises, like liquor stores, and samples would be too close to consumption on premises as well as create a hyper-competitive business climate.
Gifting cannabis, the subject of some public question in the Alaska Dispatch News, is clearly legal between adults, the board said. Gifting from a retail store, however, is out of the question. Like many others, this was modeled on Colorado law.
“It’s my understanding Colorado had it to prevent fire sale price wars,” said Franklin.
The draft regulations also prohibited selling cannabis below the cost the retailer paid for it, effectively setting a floor for sales. Board member Brandon Emmett said that decision should be left to the business owner’s savvy, not to a legislative board, and that Alaska has an opportunity to expand on its predecessors’ regulations.
“Alaska is its own place,” said Emmett. “Maybe we could stray and make some of our own decisions. In a place where you can’t grow outside marijuana, the profit margin is going to be a lot lower. I don’t know anyone industry who plans on selling their marijuana at rock bottom prices.”
They compromised, allowing sale below retail cost but still banning free samples at retail stores.
Also banned from marijuana stores is anything besides marijuana.
The board passed draft regulations that prohibit retail cannabis establishments from selling cigarettes, drinks, snacks, coffee, tea, or anything consumable but non-cannabinoid in nature.
The intent, according to Franklin, is threefold: to keep minors from having a reason to enter the premises, regulate on-premise consumption, which would be made difficult by selling snacks alongside cannabis-infused edibles, and prevent “confusion to customers about which things contain marijuana and which things don’t.”
Board chair Bruce Schulte had argued that selling additional items presented no public safety interest, and was simply a business option.
“If they think they can make a few extra bucks by selling cigarettes, that’s a commerce issue. I don’t see how that’s a public safety concern,” said Schulte.
An amendment to allow non-marijuana sales failed 2-3, with Schulte and Emmett (the industry representatives on the board) voting in favor and Peter Mlynarik, Loren Jones, and Springer voting against. Branded merchandise was on the agenda for the Sept. 1 portion of the meeting.
Certain regulations will go beyond alcohol’s current restrictions.
Persons younger than 21 years of age will not be allowed onto cannabis retail businesses entirely, in contrast to alcohol regulations, which allow minors to accompany guardians into package liquor stores. Customers will be required to show valid ID.
In a previous interview with KTUU on Nov. 3, 2014, Franklin had quoted the alcohol regulation that allows a minor to enter an alcohol package sales store if they’re in the presence of their guardian.
Because of prior accepted draft regulations, a new snag now exists that will require every financial investor of a cannabis business to qualify for and possess a marijuana handler’s permit, similar to an alcohol handler’s permit all bar and liquor store employees are required to have.
Unlike alcohol regulations, which allow a 30-day grace period between hire of a new employee and the employee’s possession of a handler’s license, the marijuana handler’s license is required prior to the licensee receiving the final license.
Do’s
Marijuana retail stores will be open 21 hours a day, from 8 a.m. to 5 a.m., unless local authorities impose restrictions.
The proposal was for marijuana retail stores to be restricted to hours of operation between 8 a.m. and midnight. State alcohol regulations, however, allow alcohol package stores to operate 21 hours of the day and close from 5 a.m. to 8 a.m., though most local governments restrict these hours.
Again, the board elected to leave the regulations up to business owners’ and the local governments’ sense of safety, and of profit and loss. Staying open till 5 a.m. might be allowed, Schulte and Springer argued, but that doesn’t make it good business sense.
“We’re talking about a retail transaction,” said Schulte. “I can’t image that I would be open at 5 a.m., but if someone comes up with a business model where that works for them, then that’s their prerogative.”
Other members thought the allowance far too liberal, and that alcohol restrictions are a poor model in some cases.
“I wish there were tighter controls on alcohol,” said board member Peter Mlynarik. “Just because alcohol does it doesn’t mean it’s the best for the public.”
“Alcohol leads to boisterous if not violent behavior. Marijuana does not,” responded Schulte. “We’re not talking about the consumption of marijuana, just the purchase. We’re still leaving the door open for local jurisdiction to ratchet down.”
The vote to approve the hours of operation passed 3-2, with Mlynarik and Loren Jones voting against.
DJ Summers can be reached at [email protected]

Alaska cannabis businesses can sell you a hoodie, so long as the transaction is being recorded in high-definition.
The Alaska Marijuana Control Board covered allowable advertising strategies or retail dispensaries, as well as security protocol Sept. 1 on the second day of an extra meeting to consider draft regulations.
Board director Cynthia Franklin argued Montana’s greatest mistake was allowing too much advertising for medical marijuana. Montana legalized medicinal marijuana in 2004 only to have a ballot introduced in 2014 to recriminalize it. This followed a ballooning industry that roused the ire of the state legislators and a 36 percent minority of the population who hadn’t supported legal medicinal marijuana in the first place.
Because Alaska’s initiative passed with a slimmer majority, she worries liberal advertising regulations could cause the same backlash from the 47 percent of Alaskans who voted against the ballot measure to legalize marijuana.
“Advertising is a very public thing,” said Franklin. “Take a long view of this industry and don’t think that we need to advertise to the max. If we go crazy…we run the risk of attracting attention not only from our state legislators but the people who voted against this.”
No giveaways, no medicinal claims
The board held a lengthy discussion on selling versus giving away branded merchandise like hooded sweatshirts, pens, calendars, or other popular gear.
Selling branded merchandise is legal, but giving it away for free is not, though the board plans to clarify language in a later draft to make those points clear.
“A marijuana retail store may not use giveaway coupons, or distribute branded merchandise as promotional materials, or conduct promotional activities such as games or competitions to encourage sale of marijuana or marijuana products,” the draft language reads.
Franklin explained that the purpose of the prohibition was to prevent the kind of marketing tobacco used with product giveaways.
“A time-honored tactic of the tobacco industry was to give away Marlboro Man t-shirts and candy cigarettes,” said Franklin. “They were giving away branded merchandise to encourage promotion and purchase of their products.”
Board members argued that product giveaways were part and parcel of any developing business, and that the board has no place making an economic restriction. Those decisions, they argued, should be left up to business.
“Should we be removing a businesses’ ability to do this marketing?” asked board member Mark Springer. “They can’t give out a calendar. A pen. A refrigerator magnet. I’m not convinced we have any place in that. That’s economic management.”
Franklin responded that the public safety concerns of product giveaways, which she said could attract minors, are just as important as free market law.
“I’m not really sure it’s the board’s job to make business decision in the other way,” said Franklin, “to write rules that are designed to make businesses maximize their profits.”
Springer introduced an amendment to clarify the language to say, “give away for free” rather than “distribute.” The vote failed on a 2-2 tie of the five-member board, with Loren Jones recused for a conflict of interest.
The cannabis industry, including growers, brokers, manufacturers, or retailers, cannot claim any therapeutic or medical benefits, a carryover from the state’s colorblind marijuana initiative, which doesn’t distinguish between medicinal and recreational marijuana.
“Do we really want to invite more federal attention by saying, ‘yeah you can put whatever you want on there?’” asked Springer.
Board member Peter Mlynarik brought up a lack of substantiation for medical claims that would simply be inviting too much false advertising.
Members also added language that will bar advertising on college campuses or near substance abuse and recovery facilities.
The high price of security
Security regulations will tack on another six figures worth of capital expense for potential cannabis entrepreneurs, regulations industry leaders say are onerous reminders of the black market lens they believe the Legislature views them through.
“This treats us like criminals,” said Sara Williams, owner of Midnight Greenery, regarding a regulation that requires marijuana businesses to wait three days before disposing of waste, in order for enforcement officials to inspect and log it for tracking purposes.
The bulk of public comment decried video surveillance, security lighting, and transportation regulations.
Draft regulations currently require extensive video surveillance, following Colorado laws. Alaska’s proposed surveillance requirements specify cameras must be placed within 20 feet of a cannabis business entry or exit, with enough resolution to “clearly identify” features, and 40 days worth of video data storage.
Larry Clark, president and CEO of Valkyrie Security and Asset Protection, said the storage requirement alone, for high-resolution storage, will cost around $85,000.
Comments from the public, submitted electronically in writing to the board, expressed both fear at the prohibitive cost. Board members echoed the concerns, wondering how strict the enforcement would be.
“It might violate the initiative by making business infeasible,” said Emmett. “Let’s say we pass this unamended, how strict are we going to be?”
Franklin said in response that enforcement, which will be under her authority as director, will not be looking to agonize over details.
“My management style over my enforcement officers is, this is our community,” she said. “It’s not designed to be a ‘gotcha’ environment.”
On the transport side, the board removed a part of regulation that would have required a secure lockbox be bolted to the floor of whatever car is delivering marijuana.
After an amendment, the board allowed transporting in a sealed container in the trunk of a car, already required by the Anchorage Municipality for all personal use.
On a cheap note, all members of the marijuana industry will be required to complete a marijuana handler’s course, to be developed later by the board, and keep it in their place of licensed business.
Lastly, the board struck down a requirement of $1 million or greater in insurance coverage for any marijuana business, the unknown cost of which insurance companies have refused to tell the State of Alaska. Insurance will be required, but in no set amount. Insurance is not required by alcohol regulations, and board members again preferred to leave it in the hands of the business owners.
“I don’t see it achieves any of our broader imperatives, and I do see this as an unnecessary burden,” said board chair Bruce Schulte. “I do think it’s good business policy, but it’s up to businesses to decide that. It’s just an additional layer of regulation we shouldn’t be endorsing.”

Alaska’s forthcoming cannabis regulations might stop homegrown bud businesses from seeing a dime from the hot-ticket marijuana investment scene developing in the Lower 48.
Outside investment raises both industry and regulatory hackles in the Alaska cannabis scene, either as the surefire road to a federal crackdown or the harbinger of boutique-killing Big Marijuana, depending on who is asked.
Due to federal law, Alaska banks and credit unions refuse to handle cannabis-related accounts or loans. Cannabis businesses without their own startup capital have few options for funding beyond bootstrapping or borrowing from private lenders.
With potentially high entry costs, already-wealthy Alaskans could dominate cannabis business while smaller competitors scrabble for startup capital. Outside investment could narrow the gap, but also bring in big competitors in the $3 billion cannabis industry.
Regulators, however, are fearful of violating federal money laundering guidelines, and view Outside investment dollars as a possible route for dirty money from drug cartels.
Members of the Alaska Marijuana Control Board are cautious about allowing Outside investment due to the Cole Memorandum, a letter from assistant U.S. Attorney General James Cole which outlines federal marijuana enforcement priorities in the face of state-by-state legalization.
“The memo said the state should have strict laws preventing money laundering,” said Bruce Schulte, chairman of the Marijuana Control Board that is currently reviewing draft regulations for commercial marijuana to be recommended to the state Legislature in November. “Our theory was that if we disallow Outside investment we don’t have as many opportunities for money laundering. The flipside is that there are Outside funding sources available that Alaskans might want to take advantage of.”
Those funding resources are becoming more and more available as the market further establishes itself in the Lower 48. ArcView Group, a 470-member cannabis investment company, has sunk more than $41 million into cannabis industry startups.
Even Silicon Valley tech companies’ are getting into cannabis investment — firms like Privateer Holdings, a Seattle-based marijuana investment company, which had $75 million buy-in earlier in 2015 from Paypal co-founder Pete Thiel and has raised $82 million for cannabis industry players, according to a June article in Fortune.
Schulte said the board simply hasn’t received much information regarding investment regulations beyond boardroom rhetoric, and needs more.
“I’m looking for a compelling argument to support that goal of industry success,” said Schulte. “What I have suggested to people is, if they have a strong interest one way or the other, come up with a compelling reason. Cite examples. Give us some legal basis for either way. So far all we’ve got to hang our hat on is the Cole Memo.”
During its last meeting, the board left language in the draft regulations that would effectively ban Outside investment in cannabis industry. Under the draft regulations, the board will not issue a license to an individual, partnership, limited liability corporation, or corporation unless the shareholders and partners are residents of the state as defined by Permanent Fund Dividend application rules, which require a full calendar year of residency.
Anyone with a direct or indirect financial stake in the company must be listed as a licensee, and therefore follow the same residency requirements.
The draft is similar to alcohol regulations, but lack a provision that allows financial stakeholders of alcohol business to stay off the license if their total contribution is less that 10 percent of the total operating cost.
During the meeting, vice chair Brandon Emmett tried to amend the language to allow “non-controlling” financial interest, but withdrew the amendment when no other board member seconded the motion. As the chair, Schulte may not second motions.
Beyond money laundering concerns, members of the cannabis industry who pushed for the initiative fear Outside investment as the vehicle for big industry to carpetbag what they prefer to be an Alaska-first industry.
“It’s just going to let corporations come in and take over the industry,” said Jessica Jansen, co-founder of Canna-Farm Co-op and executive director of the Alaska Cannabis Growers Association.
But without Outside dollars, others say, the industry will be dead on arrival in the Last Frontier. With only 10 percent of Washington’s population and 14 percent of Colorado’s, Alaska has a smaller pool of capital from which to start the industry.
“If we want the business to be dominated by 10 wealthy Alaskan families, we’re in a good place to do that,” said Leif Abel, executive director of the Coalition for Responsible Cannabis Legislation, which publicly released a statement condemning the board’s regulation.
Able attended the Marijuana Investor Summit in Denver in April, and said he gave the 1,000 or so investors in attendance the same message: don’t come to Alaska just yet.
Abel’s legal counsel, Colorado attorney John Crone, said the Marijuana Control Board is being deliberately overcautious, as financial regulations already track business investment origins.
“There’s a whole scheme of securities laws and regulations that exist,” said Crone. “If you’re an LLC and want to sell a membership for example, you have to comply with securities regulations. Every business in Alaska already has to deal with this.”
Abel and Crone think Alaska has an opportunity to learn from Washington’s and Colorado’s failures just as much as their successes.
Washington has strict rules regarding out-of-state investment and investment in general, but more liberal than Alaska’s proposed rule. Sole proprietors of cannabis industries must meet a three-month residency requirement.
Even though less restrictive than Alaska’s proposed regulations, Brendan Kennedy, co-founder of Pioneer Holdings, said in a Seattle Times interview that his company simply doesn’t look at Washington as a potential investment pool.
“Every state is talking the same way: ‘We’re not going to make the same mistakes as Washington,’” said Kennedy in the interview.
Indeed, Colorado voted in May to loosen some of its previously restrictive cannabis investor residency requirements. Non-residents have always been able to loan money to Colorado cannabis businesses, but with a wealth of tax-related complications and the inability of the business to actually convert the loan into equity. Out-of-state investors can now sign option agreements for future financing dependent on a two-year residency in Colorado.
DJ Summers can be reached at [email protected]

The cannabis industry’s growing pains are causing unease for some stakeholders, even as the newly minted Alaska Marijuana Control Board was able to favorably change certain draft regulations.
The Alaska Marijuana Control Board decided on several changes to the draft regulations for the budding cannabis industry during its second meeting Aug. 10-11. The board set a license fee of $5,000, left an open window for Outside investment dollars, liberalized key cannabis business zoning requirements, removed a requirement for license holders to list their family members’ information on license applications, and estimated the number of licenses for cannabis businesses.
While cannabis is legal to consume and possess, its sale is prohibited until the Marijuana Control Board issues business licenses in May 2016.
Until then, the board has three sets of draft regulations to review and amend after public comment, and before recommending to the state Legislature in November.
Some changes, like the family information clause and the zoning rewrite, were a relief. Decisions about cannabis capital, however, only deepened concerns about the industry being skinned by the State of Alaska before it’s even had a chance to be sheared for tax dollars.
The Marijuana Control Board has five members, two of whom — chairman Bruce Schulte and Brandon Emmett — were appointed as industry representatives. Schulte and Emmett are president and vice president, respectively, of the Alaska Marijuana Industry Association. Both the Alcoholic Beverage Control Board and the Marijuana Control Board share division director Cynthia Franklin.
Some cannabis industry leaders felt that the marijuana board lacked experience enough to make needed changes to regulations that constrict, rather than enable, industry growth.
“The Marijuana Control Board was exposed to a facet of the Alcoholic Beverage Control Board that they have no control over,” said Lee Haywood, a local cannabis industry consultant. “They have to interpret the language that’s already been written by another entity rather than being able to create their own drafts. I know that’s the way it was written (by the Legislature), but I don’t know that the people who are writing these drafts are necessarily the people who voted for these drafts.”
Jessica Jansen, executive director of the Alaska Cannabis Growers Association and co-founder of Cannafarm Co-op, said, “There was a lot of compromise on the industry seats’ side.”
The Alaska Alcoholic Beverage Control Board wrote each set of draft regulations. The alcohol board staff, led by Franklin, drafted the proposed marijuana regulations to closely resemble alcoholic beverage statutes.
During the two days, the board skipped between the first and second sets released earlier this year making either approvals or amendments, and weighing public opinion provided to them in summarized form. The summaries were not made available to the public, though the consolidated comments were.
Cost of entry: $5,000
Among the most impactful decisions was finalizing the licensing fee for cannabis business operations. The board settled on $5,000, as written in the draft regulations. Emmett made a motion to lower the fee to $2,500, which failed by a 1-4 vote.
Public comment was heavily weighted against the $5,000 licensing fee, which some felt is prohibitive for smaller cannabis grow operations.
Grow operations are divided into two categories: those less than 500 square feet and those greater than 500 square feet of grow space. Without a tiered system of licensing with an corresponding fee structure, growers worry that the $5,000 fee will drive potential legal industry players further into the black market.
From the state’s view, the fee is large by necessity. The Marijuana Control Board is funded by unrestricted general funds, which are on the chopping block in a state with a severe budget shortfall. Franklin said cannabis business fees are high because they need to get the industry on its feet quickly before it becomes a burden for the state.
“We’ve got to get our agency to a place where work on marijuana is funded by licensing fees,” said Franklin. “That’s the only way we can insulate ourselves from the Legislature legislating marijuana by starving it to death.”
Franklin also said the $5,000 licensing fee is “chump change” compared to that of other states where cannabis sales are legal.
“Pretty much every state we saw had higher fees,” she said. “You’re funding a new industry. You’ve got to get it up and running.”
The fee structure for retail marijuana in Colorado varies by local authority. In Denver, new applicants pay a $5,000 fee, according the Denver Business Licensing Center. In Aspen, marijuana businesses have a $2,000 operating fee, according to the City of Aspen’s business licensing website.
In Washington, the annual issuance or renewal of a retail license costs $1,000 after a $250 non-refundable fee, according to the Washington State Liquor and Cannabis Board website.
Using the $5,000 licensing fee, the board came to a rough estimate of the number of cannabis licenses that will be available.
According to staff, the ACB has a $1.6 million annual budget. At $5,000 apiece, staff estimates 320 total statewide marijuana licenses, including grow operations, manufacturing, and retail.
In comparison, there are roughly 1,800 alcohol licenses in the state.
Outside cash and zoning
During the board meeting, the need for investment capital clashed with the fiercely local-first Alaska mindset. Neither side won definitively, leaving the matter open, as Emmett puts it, to “interesting ways to find capital.”
The board kept a system of residency requirements for cannabis business license holders that satisfied neither the desires for Outside dollars nor the desire of current cannabis business advocates to keep business opportunities local to the 49th state.
Due to the federal classification of cannabis as a Schedule I controlled substance, Alaska banks and credit unions refuse to handle cannabis-related accounts or loans. Cannabis businesses without their own startup capital have few options for funding.
Outside investment, however, is a possibility, though an unpopular one among the cannabis advocates who lobbied for legalization and feel protective of the newly opened business opportunities.
Others, like Emmett and Midnight Greenery CEO Sara Williams, acknowledge an Alaska-first preference but said allowing Outside investment will be the only way for businesses to get funding in Alaska without securing loans from the already wealthy in the state.
Under the draft regulations, which mirror alcohol licensing regulations, the board will not issue a license to an individual, partnership, limited liability corporation, or corporation unless the shareholders and partners are residents of the state.
Emmett argued in favor of changing the language to allow greater Outside investment, but withdrew his amendment.
In industry’s favor, the board modified several unpopular regulations involving zoning and licensing procedure.
In the draft regulations, an applicant for a cannabis business license would have had to provide the Social Security information for each of his or her family members. The board deleted the requirement.
“It’s preposterous to think you’d have to provide sensitive information for every member of your family because you want to run a business,” said Emmett.
The board voted in favor of removing a restriction that prohibited a cannabis business from operating adjacent to a liquor license holding business. Local governments provided public comment largely against making such prohibitions, citing the desire for cannabis tourism that they would likely thwart.
The board also changed zoning to allow cannabis businesses within 500 feet of schools, recreation, and youth centers. This is closer than the federal Drug Free Zone standard of 1,000 feet, but farther than the 200 feet demarcation the board originally proposed. Colorado and Washington follow a 1,000-foot rule.

Those hoping to get in on the ground floor of Alaska’s legal marijuana industry now have a supporter.
The Alaska Marijuana Industry Association announced it is open for business July 9 during a briefing at The Boardroom workspace in Downtown Anchorage.
Alaska Marijuana Industry Association President and board member Bruce Schulte, a pilot by trade, said the five-member board recognized a need for an organized industry resource to help a burgeoning group of cannabis entrepreneurs.
“Our focus as a group, AMIA, is the business, the commerce (of marijuana) and all the things that are entailed there,” Schulte said. “We’re a seed-to-sale industry association.”
The group is in the process of completing the requisite steps with the Internal Revenue Service to become a 501(c)(6) nonprofit eligible to advocate and lobby on political issues.
Formally organized in April, the four board members present at the introductory meeting said they have all been busy working in their hometowns across the state to help the local governments learn about legal marijuana and how they should manage associated businesses.
The board has five members now, but Schulte said the table would likely grow to 11 seats to assure each aspect of the farm-to-retail industry is included.
AMIA will be accepting guest members until businesses are able to pay for full memberships once the marijuana business is legal in Alaska, according to the board.
Full AMIA membership will be contingent upon holding a valid State of Alaska marijuana establishment license, according to the group’s maturing code of conduct.
Until then, the Marijuana Industry Association board members will continue their work pro-bono.
Ballot Measure 2, passed by voters in November and promoted as a push to regulate marijuana like alcohol, allows persons 21 years of age and older to possess up to an ounce of marijuana.
It also allows local governments to regulate or prohibit marijuana-based establishments and establish annual operating fees, creating a local regulatory authority.
Possession of marijuana became legal in February, on a timeline laid out by the statewide referendum.
The next major deadline is Nov. 24 for the recently established state Marijuana Control Board to adopt its regulations for the drug. After that, Feb. 24, 2016, is the last day the state can start accepting business license applications from those wishing to grow, process or sell marijuana — one year after it became legal to possess. The state will then have up to 90 days to review license applications.
AMIA Vice President and board member Brandon Emmett of Fairbanks is a founder of one of the state’s current leading marijuana advocacy groups, the Coalition for Responsible Cannabis Legislation. Emmett also serves on the Fairbanks North Star Borough’s Marijuana Advisory Board.
Schulte is a member of the Anchorage Assembly’s Committee on Regulation and Taxation of Marijuana.
Kasilof contractor and AMIA board member Leif Abel chairs the Kenai Peninsula Borough Marijuana Task Force.
Emmett said the Fairbanks council has been focused on zoning issues — where potential businesses of all types related to marijuana production and sale will be allowed to locate. Zoning is going to be one of the most important issues for the industry in Alaska, he said.
While ultimately an advocacy organization, AMIA will not try to push communities in their decision-making regarding marijuana, according to Emmett.
“Our goal is not to try and continue the campaign and convert these local governments that have decided not to regulate marijuana within their boarders,” he said. “But those that have, we’re going to be the resource for the industry and help provide best practices to make sure that the industry that they choose to have within their municipalities works well there.”
Schulte said the “obvious comparison” of AMIA to the Alaska Cabaret, Hotel, Restaurant and Retailers Association and alcohol is a fair one.
AMIA board member Kim Kole, founder of the Alaska chapter of Women Grow, said the group would eventually set up a group health insurance plan for its member businesses as well.
Abel said he would expect to see product on retail shelves no sooner than late August 2016, given the time it takes to grow the plants after growers could start legally operating.
Emmett and Schulte were also appointed as industry representatives to the Marijuana Control Board, giving them at least some say in how the state regulations are molded.
As a result, Schulte said the two are limited as to what they can discuss with other AMIA members and what opinions they can offer about regulatory issues.
Gov. Bill Walker announced the initial five-member board July 1. The group quickly held an introductory meeting July 2 in Fairbanks.
The board is under the state Commerce Department along with the Alcoholic Beverage Control Board.
A rough draft of the regulations would restrict anyone with a marijuana establishment license from operating within 200 feet of schools, daycares, churches or correctional facilities.
Other issues likely to be addressed include THC levels in marijuana edibles and concentrates and on-site product security for all aspects of the supply chain.
Emmett said the successes and failures of legalization and business regulation in Colorado and Washington are being studied and learned from.
“What we know from the other two states (where recreational marijuana is legal) is that the sky hasn’t fallen and they’re both making money in the form of tax revenue, but also in new business popping up,” Emmett said. “People make money, they spend money.”
Schulte said Alaska’s marijuana rules need to be acceptable to not only to those in support of legalized marijuana, but also to the 47 percent of voters who opposed the law change for the initiative to be successful.
“This is very much the ground floor of a newly legal industry. There’s a lot of opportunity; there’s a lot of unknowns; there’s a tremendous amount of work to be done,” he said. “There’s a lot of good people that are willing to operated in a rational, reasonable manner as a regulated industry. We support that.”
Taxes and financing
The ballot measure imposes a $50 per ounce excise tax on all marijuana dealt between a grower and a manufacturer or retailer.
Abel said limiting other local taxes and fees will be paramount to ensuring a healthy legal marijuana industry in Alaska can marginalize the black market.
“If we’re overtaxed, then in effect, we will not be an industry,” he said.
Abel noted that marijuana tax revenue will be a “drop in the bucket” compared to oil and gas taxes and other state funding sources.
While Colorado has a much larger population than Alaska, the tax revenue there has not been insignificant, and it’s growing as the industry stabilizes.
Through May, the State of Colorado took in nearly $102.4 million in marijuana taxes and business fees this year. That is about triple the $34.8 million generated over the first five months of 2014.
Colorado has an overall 12.9 percent sales tax on marijuana, which includes the general 2.9 percent state sales tax on all consumer goods. Recreational marijuana is also subject to a 15 percent excise tax on the average market retail price for a given quantity; medical marijuana is exempt from the excise tax.
The State of Washington simplified its marijuana tax structure July 1 to a straight 37 percent excise tax on retail customers, eliminating taxes levied on producers, processors and retailers.
Kole noted that tourists have buoyed sales in Colorado. With more than 1.5 million visitors coming to Alaska each year, the tourism market could be a big one in the state, she said.
Finding traditional financing has been an issue for many marijuana-based businesses in the first states to legalize recreational marijuana.
The Justice Department under the Obama administration has said it will respect states’ decisions in regard to marijuana, but it is still an illegal substance under federal law. How a new administration in 2017 will treat the drug is a big unknown.
As a result, federally-insured banks and credit unions are wary of providing loans or lines of credit in an industry that could get caught in a tug-of-war between states’ rights and federal authority.
That’s a big difference than saying Alaska banks are not interested in a new market, according to Emmett.
“Any financial institution, if you’re able to have a one-on-one sit-down with the leaders, they’re saying, ‘Yes, we want to be a part of the marijuana industry,’” Emmett said.
The industry has grown in Colorado and Washington on primarily a cash-only system, which has not only made security an issue, but also tax collection.
Alaska U.S. Rep. Don Young introduced the Compassionate Access, Research Expansion and Respect States Act in March with Tennessee Democrat Rep. Steve Cohen. The bill is one of several pieces of legislation with bipartisan support in the House — eight Republican and eight Democrat co-sponsors — that would allow financial institutions to provide banking services to marijuana-based businesses in legalized states without fear of federal retribution.
Young and Cohen’s bill and others would also make it a Schedule II drug, lift other federal restrictions and allow Veterans Administration doctors to prescribe medicinal marijuana.
Young said in a formal statement when the bill was introduced that marijuana is an issue of states’ rights to him.
“My position aims to reaffirm the states’ rights to determine the nature of criminal activity within their own jurisdictions, which I believe is critical for states to effectively legislate within their borders,” he said in March.
Ultimately, the marijuana industry needs what every industry needs to succeed, reasonable taxes and regulations, the AMIA board members said. Without support from the state, law-abiding businesses will not be able to extinguish a black market nobody wants.
“We’ve got to make it a better option to work with the state than to keep avoiding the state,” Emmett said.

The state of Alaska now has its first Marijuana Control Board. Selected by Gov. Bill Walker and announced on July 1, the initial board members will face a weighty task: charting a course to commercial permitting and regulation of retail marijuana sales. Given the magnitude of their responsibility, it’s a good thing the marijuana board has as much time to draw up policy as it does.
Some of the five initial selections to the board will be familiar to those who pay attention to local government or state action on the marijuana issue so far. In particular, the two seats on the board allocated to representatives of the marijuana industry will be filled by the two figures most prominent in the legalization campaign and legislative process.
Brandon Emmett, of Fairbanks, is the executive director of the nonprofit Center for Responsible Cannabis Legislation, which was active in promoting marijuana legalization during 2014’s ballot initiative campaign. And Bruce Schulte, of Anchorage, was the marijuana industry’s representative in Juneau.
Mr. Schulte helped explain the practicalities of legal marijuana to legislators debating law changes and argued against what he saw as attempts to thwart the will of voters in making the drug legal.
The other three seats on the board will be filled by representatives of the public health, public safety and rural communities. Loren Jones is a Juneau Borough Assembly member who has served as director of the state Division of Alcoholism and Drug Abuse.
Peter Mlynarik is Soldotna’s chief of police. And Mark Springer sits on the Bethel City Council. All three will have valuable experience and insight that will help inform the board’s decisions as it weighs its options on commercial marijuana.
The structure of the board is well crafted and, given its makeup, is likely to ensure state residents’ perspectives on the marijuana issue are represented in the determination of policy and regulation. The marijuana industry’s two seats for the coming year will ensure the voices of the majority of Alaskans who voted in favor of legalization are represented.
At the same time, those likely to be dealing with some of the negative consequences of the drug’s legal status — law enforcement, health professionals and rural residents (who are sometimes short on both of the former) — will also have a seat at the table to make sure implementation of marijuana regulations protects residents from as many pitfalls as possible.
There’s a knock to be made against the governor’s selections. While all of those selected are well qualified, they’re also all men. This is likely partly the consequence of the makeup of those who applied — out of 132 applicants for the board, only about one-fourth were women. But among the roughly 30 female candidates, some were well qualified, would have served the state well and also added additional perspective to the group. It will be something for Gov. Walker to keep in mind when making future selections.
The members of the marijuana control board have their work cut out for them. Between now and Nov. 24, the group must draft and approve all of the state’s policy for dealing with retail marijuana growing, marketing and sale. By February 2016, they will begin accepting license applications for commercial marijuana operators, and by May 2016 those licenses will be issued and the full breadth of marijuana legalization in Alaska will be in effect.
It’s going to be a tough job, but those in the newly filled board seats volunteered for it. Their first meeting took place in Fairbanks July 2 — there’s no time to waste.

(AP) — Communities could opt-out or limit marijuana businesses much the same way they do alcohol under proposed regulations put forth by the state alcohol control board.
The board reviewed the first of three sets of marijuana regulations on Thursday, which included a system for community regulations.
Voters approved a ballot issue in November legalizing limited recreational marijuana and directed the board to develop regulations for the industry.
A new marijuana board that shares staff with the alcohol board is expected to take over that work eventually. Legislators recently passed a bill to establish the new board.
The first set of regulations would allow municipalities and established villages to prohibit the new industry, or to limit what aspects of commercial or retail marijuana sales, cultivation and manufacturing are allowed in the community.
Cynthia Franklin, executive director of the state alcohol board, said there will be one major difference between alcohol and marijuana regulations: Communities can prohibit alcohol possession entirely but cannot prohibit marijuana possession at home because it is protected as a privacy right under a prior Alaska Supreme Court decision.
The draft regulations also included a definition of edibles that prohibits sales of prepackaged food that has been altered to include marijuana.
Other definitions in the regulations include marijuana plants and possession.
The board directed the state Department of Law to open a public comment period on the regulations reviewed Thursday. The next meeting on the new regulations likely will be held in July, and Franklin said the new marijuana board could take over the regulatory process at the point.
The next set of regulations, which is expected to include rules for testing and certifying marijuana, will also likely be reviewed at the July meeting, Franklin said.
The board also made permanent a temporary regulation that defines the public places where marijuana is prohibited.

JUNEAU (AP) — The Alaska Senate on March 30 got closer to having state statutes reflect what remains illegal after Alaska voters legalized limited recreational marijuana last year.
Senators voted 17-3 to pass the bill, which outlines crimes for possessing more than 1 ounce of marijuana, the threshold voters approved last November for personal use by adults.
It changes the crimes for possession of larger amounts of marijuana, including making it a felony to possess more than 16 ounces of marijuana, and also makes it illegal to deliver marijuana for sale.
The bill also keeps marijuana on the state’s list of controlled substances and prohibits a commercial or retail marijuana industry in areas where there is no organized borough or municipality.
Sen. Anna MacKinnon, R-Eagle River, said the version of the bill produced by the Senate Finance Committee balanced legalization with enforcement concerns from state officials.
Bruce Schulte, a marijuana legalization advocate, wrote in a text message to The Associated Press that he would have preferred to see marijuana removed from the state’s controlled substances list.
Sens. Johnny Ellis, Berta Gardner and Bill Wielechowski, all Anchorage Democrats, voted against the bill.
Wielechowski said he thought marijuana should have been removed from the state’s list of controlled substances, and tried to amend the bill to make that change. That amendment failed.
Other amendments to the bill were also defeated during lengthy floor debate Monday, including one from Fairbanks Republican Sen. Pete Kelly that would have made marijuana concentrates illegal in two years.
That failed, with two Democrats joining four Republican majority members in support. One of the Democrats is part of the majority caucus.
Those opposing the amendment said it didn’t appear to match the will of the voters. The initiative that passed in November included concentrates in the definition of marijuana, and those opposing the amendment said they thought banning them would not meet the intent of the initiative.
The bill now goes to the House.